New Credit Card Reform Opens the Need for More Payday Loans
News Alert! On February 22, 2010, the new Credit Card Reforms Act (CARD) was implemented and it looks as if payday loans have a promising future. The newly enacted document is enforcing some very rigorous rules on credit card agencies in order to protect the rights of consumers against unclear credit stipulations, ever changing interest rates and ill-advised decision making. With these changes in effect, banks will focus on lending to people with near to perfect credit, possibly causing many consumers with shady credit to seek alternative types of loans including instant payday loans.
What the New Credit Card Reform Does For the Consumer
The new credit card reform, which came into effect this year, forbids credit card companies from increasing high interest rates to consumers whenever they like; however, there are other fees that have to be accepted by consumers such as the zero balance and inactive card fees. On account of this, credit card companies are frequently tightening up lending to customers, especially to those with not so good credit. This is being done to reduce the risks involved in lending, especially when it comes to charging ridiculously high interest rates to paying customers as a reimbursement for losses. This is one of the main reasons why payday loans are so attractive and one of the most popular means of acquiring money.
Making Things More Simpler for the Consumer
These are small cash loans ranging anywhere from $100 to $1000 awarded to consumers who have met a certain criteria. However, the loans do come with a due date; therefore, many payday lenders are within their right to provide extensions on due dates. One of the advantages of acquiring these loans over traditional loans is that the qualifications aren’t extensive and obtaining them are a lot easier with payday lenders online where you can apply and have your application approved within 24 hours.
A Steady Job May Be Your Only Requirement
Most banking facilities that offer loans and credit card stipulations normally require a high credit rating, a flawless credit report, an extensive employment history (2 years maximum) as well as a minimum of two years in your present housing and possibly more requirements. These types of stipulations or criteria don’t exist with payday cash loans; with the exception of a stable place of employment for substantiating repayment, everyone should qualify.
Knowing What You Are Getting before You Get It
On account of the simplicity in obtaining a payday loan, they’re classified as high-risk loans and high-risk loans have much higher interest rates starting at 15% -30%, while the APR could range anywhere from 300% to 800%. Because of this, anyone getting these types of loans are instructed to repay them by the first due date in order to avoid penalties for late payment or extension fees. These fees can add up quickly and if a loan is allowed to incur interest as well as unnecessary fees, it becomes more difficult to repay.
You will find that pay day loans have striking similarities with credit card debt and various other types of loans. Nevertheless, if consumers were more knowledgeable of the advantages and disadvantages found within the terms and conditions, they will be more prepared to make accurate decisions.